Operating ROA Is Calculated as ________, While ROE Is Calculated

question 19

Multiple Choice

Operating ROA is calculated as ________, while ROE is calculated as ________.

• A) EBIT/total assets; net profit/total assets
• B) net profit/total assets; EBIT/total assets
• C) EBIT/total assets; net profit/equity
• D) net profit/EBIT; sales/total assets

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Definitions:

IRS Method

Refers to specific guidelines and procedures established by the Internal Revenue Service for calculating taxes, deductions, and other tax-related matters.

Mortgage Interest

The interest charged on a loan used to purchase a property, which is often tax-deductible for homeowners.

Vacation Home Properties

Real estate properties owned for personal use as a vacation getaway, which may also generate rental income.

Primarily Rental

Refers to property or real estate primarily used for rental purposes, where the primary intent is to generate rental income from tenants.